Halister News

--GREG SULLIVAN

(Bloomberg) -- Dollarama is upgraded to buy from neutral by Desjardins, which will revise forward EPS estimates given "what almost appears to be systematic forecast error on our part." The company’s recent strong performance has been driven in large part by an increasing gross margin and decreasing SGA expense rate, Desjardins analyst Keith Howlett writes in a report.

• EPS growth rate above 25% over the past five years vs analyst expectations of 15% to 20%
• Gross margin rate up 103bps to 48.6%; adjusted to remove occupancy costs
• SGA expense rate of 13.9% is "unusually low"
• Dollarama is introducing products at higher price points and ramping up inventory velocity; guidance maintains 60 to 70 new stores openings (1,125 stores nationwide)
• PT upped to C$154 from C$134
• Shares up 3.2% to the highest ever
• NOTE: 12 buys, 4 holds, no sells; avg PT $144: Bloomberg data

To contact the reporter on this story: Kristy Westgard in New York at kwestgard1@bloomberg.net To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net Christiana Sciaudone

--Washington Newsroom (202) 624-1820

(Bloomberg) -- Baird recommends investors halt bank shorting positions as the KBW Bank index of leading banks and thrifts underperforms the S&P 500 and valuation multiples remain lackluster, Baird analyst team led by David George writes in a note. 

• Underperforms SPX by ~8% QTD, ~12.4% YTD
• Valuation multiples "not compelling enough to aggressively buy banks" 
  • Median second NTM P/E (~11.5x) and NTM PPNR (~7x)
• Investor 3Q expectations revised downwards amid slower loan growth, yield curve flattening and lower market activity  
• Upgrades Zions Bancorporation to neutral from underperform as it reduces its efficiency ratio and boasts substantial excess capital, causing shares to lag
  • Downgraded earlier last month, which effectively brought shares back to reasonable territory
• NOTE: ZION 14 buys, 15 holds, no sells; avg PT $50: Bloomberg data

To contact the reporter on this story: Kristy Westgard in New York at kwestgard1@bloomberg.net To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net Christiana Sciaudone

--DEREK WALLBANK